In an interview at the auto show in Nacka, Victor Muller admitted there Saab made mistakes dealing with the press last week. “We failed last week, clearly. We have spent one year trying to build up trust and the confidence in the business. It will take time to repair this, but we’ll repair it.” Since last Wednesday, there have been serious concerns raised in comments here by the production stop– does Saab have enough money to last the year? Will sales rebound? How can we trust management now? Potential customers are left wondering if Saab is a viable company anymore. Any dealer can tell you one of the most common questions asked to them is whether the company will be around next year, making a sale all that much harder. While the SaabsUnited community knows that Saab has a sound business plan and willing partners ready to step up to the plate to provide bridge funding, the average consumer usually collects the worst snippets and pieces them together to create their own picture. Last week certainly didn’t help to change that view.
Going forward, Victor is clear– “The most important thing Saab must now do is to not be in the media in a negative way,” something we can all agree on. “We have spent one year trying to build up trust and the confidence in the business. It will take time to repair this, but we’ll repair it.” This is the statement I’ve been waiting to hear from him since this whole debacle started. Demonstrating that he’s taking criticism to heart, it’s clear that he understands that the only way to get customers back on board is to provide some sort of clarity and transparency into the business plan, so that the next time a supply disruption occurs, the media can’t react and create their own picture of what’s really going on. I think where the controversy started was when the press jumped to their own conclusions by filling in the gaps of the story without taking into account the whole story, only from one side. What I and others here were trying to avoid was making assumptions based on faulty information, judging for ourselves the truth without a full picture. This is why we tried to create space and time for the details to sort themselves out– now that production is ramped up again and the situation seems to be under control, we can finally start to reflect more critically on what happened. Some here rightfully demanded that management be clearer and come out with the facts in a quicker way. While we all like quick answers, sometimes we need to remind ourselves to be patient and realize that Saab is essentially a start up, that they’re rebuilding their management team and that they haven’t been used to managing public expectations of their finances in such a public overt way.
Remember that under GM, Saab was simply described as “loss-making,” and there was always someone at GM left to pay the bills. Yes, being a part of a multinational conglomerate had its advantages, namely shelter from an overly critical media. In a recent letter to shareholders, Victor said “I have compared Saab often to a beautiful lion who grew up in captivity. One day that lion is loaded on to a truck and released in the vast savannahs of Africa. That mighty animal has to learn how to hunt for its own prey and support himself. Being used to receiving his meals in a stainless bowl, that lion has some serious challenges adapting to his new-found freedom.” While I agree that’s a romantic description of the situation, I think of it more like a divorce between two partners who fell out of love with each other. GM went off on its way with a fantastic settlement and new swagger that Saab helped to influence. Meanwhile Saab is left figuring out how to do so many of the things that GM used to handle or that it never had to worry about dealing with when it was with GM– paying the bills, managing expectations of supplier agreements, etc. Is Saab better off single? No question– it’s finally free to date around, and clearly hooking up with BMW, ZF, American Axle, and future partners is a lot more fun than being bossed around by GM.
But there are certainly disadvantages. In past negative cash flow years, Saab could hide under the GM umbrella and didn’t have to report their finances publicly, though GM liked to say that Saab always had a loss despite evidence to the contrary, probably for currency reasons. One piece of information that is clear from the media reports is that the suppliers have been routinely compensated at irregular and often late intervals going back to the GM era; it’s clear there were supply disruptions in the past too. But now that Saab is on its own, there’s a hypersensitivity to any seemingly negative symptoms that could suggest deeper problems within the company. At any sign of trouble, we may yet hear alarms go off in the press, and Saab has a daunting task to make sure that these small fires ring as few alarms as possible.
“If we have a production stop for two hours, when we lose 56 cars, in the media it’s like we’re going bankrupt,” Muller said. “It’s almost impossible to prevent, but you can do your utmost to contain situations. The situation last week just spun out of control.” “The business plan did hold up last year” in terms of earnings before interest and taxes. Victor also said that he wished Spyker had not given production forecasts for Saab, saying the company had been “hammered” for failing to meet the targets. “The business plan and reality are two different things. The business plan said we were going to make 50,000 cars last year. But we didn’t.” That said, “The team managed to push down the break-even point and the cost, which was quite an achievement,” he told reporters today.
There aren’t too many second chances in this game, but with a new CFO, CEO, and strengthened PR message, I think Saab stands a good chance of getting it right going forward. As Saab customers and fans, most of us tend to give Saab management the benefit of the doubt, yet scratch our heads when answers don’t seem to line up quite as neatly as we’d like. It’s crucial for everyone, from the factory worker to the CFO, from the dealer sales representatives to the first time Saab owner, to have credible information. Some of us here have very strong opinions about how Spyker manages PR and the company, and suggest this situation shows that they’re out of touch and unable to handle the complexities of managing Saab. I’d like to remind everyone what a huge task it was for Saab to be sold from out of GM’s clutches last year in the first place, and have just a little more faith in Victor Muller and his team. With our commentary, as Saab’s most active customer base on the internet, our best function in moments like this is to offer constructive criticism and solutions to help Saab recover. So with that I’m hoping that we can offer up comments in a more constructive tone, and I’d like to put out a challenge to everyone to come up with their own ideas on how Saab can prevent situations like this one from getting out of control in the future. How can Saab stay ahead of the stories in the first place? Should Saab have a team dedicated to updating the Swedish press behind the scenes? Should they be even less candid with information and investor guidance seeing that their skewed sales figures seem to have triggered the most criticisms from the press? What positives like Saab’s low breakeven or their renewed model lineup can you elaborate on as reasons for the media and potential customers be aware of that shows Saab has a credible plan? I’m curious to hear what ideas people have in comments. Some examples of PR initiatives that I think Saab should be working on right away:
- Present a clear picture of Saab’s business plan to customers in a 1 page brochure or poster available at dealers, so at point of sale any ambiguities or hearsay a customer may be influenced by can be eliminated. Discussion about how Saab can be small but still make a profit as a small automaker because of their lower breakeven and new partnerships should be made clear.
- As soon as new loans are approved, instead of simply a press release, hold a press conference or call with media to give an update on the state of the company.
- Give customers peace of mind when they buy the car, make it clear that their warranty is in effect and perhaps even extend it an extra year to give assurance that they will be covered no matter what happens.
- Start leaking development information about the new 9-3 to give the press something positive to talk about, just like GM did with the Volt at the height of their bankruptcy fears.
There’s plenty more ideas, and we’d love to hear them. In the next few weeks there will be plenty more opportunities for us to offer our own opinions on pointed issues, from dismal US Sales, to development priorities. The new team is trying our best to keep the dialogue here above the typical speculative fray, and make sure we as an enthusiast site don’t fan the flames of hysteria that is so common on most Swedish news sites. While we can’t make everyone happy, we appreciate that you at least respect our intent to keep this site a positive place for people who love Saab to have a reasoned debate.
Finally let me address something that’s been bugging me all day since I first read it. Swedish supplier group FKG and investor group VEB are making it known they’re pissed that Victor got a €500,000 bonus last year, even though Saab lost money. Spyker’s annual report shows Muller was also paid a €550,000 management fee and 120,000 Spyker shares for his role in the takeover of Saab, though he doesn’t earn a salary. Did they forget that this is the man who pretty much single-handedly had the balls to save the company? In 2010, no Victor Muller means no Saab. His compensation is a drop in the bucket compared to losing the company. Given that one of the best chances Saab has at getting more funding is through his close friend Vladimir Antonov, in my opinion having Victor as chairman with his connections is worth every penny.